Implementation Bpsm
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Transcript of Implementation Bpsm
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Strategy Implementation
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Formulation of a strategy is not the end ofstrategic management. In fact, it is thebeginning of a whole new episode of success orfailure of an organization.
Implementing a strategy requires a very highlevel of commitment from the top management,employees, organization culture, structure,leadership, departments etc.
Strategy formulation and implementation areinterrelated.
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Forward linkage : Deals with preparing theorganizational activities including the org.
structure, leadership, culture etc required forimplementation.
Backward linkage : Deals with the influence ofimplementation on the strategy formulation. (To
avoid any deviations in the ground reality )
Different strategies require different changes inthe business processes.
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Stability strategy requires least change.
A strategy of changing price requires
minor changes in the marketing dept. anda few changes in the day to day businessactivities.
Joint Ventures require radical change likereplacing org. structure, technology, newmarkets, new practices etc.
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Project implementation
Strategies give rise to plans, programmes,projects, budgets, policies, procedures,
rules and regulations. Project : A project can be defined as aOne shot, time limited, goal oriented,
major undertaking requiring thecommitment of varied skills andresources
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A project passes through the followingphases :
Conception : Of a number of strategicalternatives that generate at the time ofstrategy formulation, some ideas form theplatform for the beginning of projects.
These ideas are developed further andranked on priority.
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Definition phase :Of all the project ideasselected and ranked, a preliminary analysis isdone from the point of view of marketing,technical, financial, ecological feasibility.
After studying the viable projects, a detailedproject report is prepared for submitting to thefinancial institutions.
This report contains all details about the projectsuch as the promoters, nature, capacity,location, size, cost, assets, selling arrangementsetc.
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Planning and organizing : Detailed planningregarding the technical aspects, engineering
design, infrastructure, schedules, budgets etc isworked.
Implementation : The detailed engineering,issuance of orders, civil construction, etc are
undertaken.
Clean up : Finishing and handing over the plantto operating personnel.
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Procedural Implementation
Formation of a company is governed by theprovisions of the companies act 1956 andconsists of promotion ( primary step ),
registration of the memorandum of the companywith the Registrar and flotation of the company (Raising Capital ).
The IRDA of 1951 divided all industries in three
categories. Government Private Joint
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Procedural Implementation
Licensing procedures : A license is a writtenpermission by the government to an industrial
undertaking to manufacturers specified in theschedule.
Post 1991, after the govt. adopted the policy ofLPG, licensing procedures for all sectors of non
strategic importance were abolished. The onlystrategically important sectors were the defense,environment etc.
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Procedural Implementation
SEBI requirements : The SEBI Act of 1992, hadthree main objectives :
The protect the interest of investors in security To promote the development of security
markets.
To regulate the security market. All strategies should be developed by taking into
consideration all the regulations laid by theSEBI.
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Procedural Implementation
The MRTP Act of 1969 had the main aim ofpreventing the concentration of economic
power.. It oversees and prevents : Collusions and Cartels
Price discrimination among different customers
Forcing buyers to buy a whole range ofproducts.
There should always be free and faircompetition.
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Procedural Implementation
Foreign collaboration procedures : many strategies resultin foreign collaborations. Foreign investment is of twotypes :
FDI takes place through wholly owned subsidiariesforeign institutional Joint Ventures and Acquisitions.
FII takes place when the outside parties invest ininstruments such as GDR ( Global Depositary Receipts )FCCBs (Foreign currency convertible bonds ).
Special incentives are given to NRIs for this purpose.
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Procedural Implementation
FERA / FEMA has now considerablyliberalized rules related to maintenance of
dollar accounts by exporters, remittanceof foreign exchange for visits abroad,agency commission export claims etc.
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Procedural Implementation
Export Import requirements : Thegovernment today supports import
substitutions and offers incentives toorganizations who take initiatives inproduction of capital goods and raw
material which is currently imported.
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Procedural Implementation
Patenting and Trademark requirements :Owning to the international change, patents,trademarks, copyrights, designs are assuminggreater importance.
Important industries where innovations aretaking place are chemical, computer software,entertainment, food, pharma etc wherepatents are a major tool. These elements aregoverned by the Trademark and MerchandiseMark Act, 1958, Copyright Act 1957.
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Procedural Implementation
Labour Legislation requirements : Various lawsrelated to the betterment of the workforce have
been formulated. These include : Labour Laws related to women and children.
Labour Laws related to specific industries likemines, minerals etc.
Rules regarding the provision of a base forwages, social security, bonus have beenformulated.
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Procedural Implementation
Environment Protection and Pollution Control : Sterncontrol has to be enforced on use of non renewablesources of energy such as oil and natural gas. Increased
national and global awareness about overuse and misuseof natural resources such as air, land, water, hasresulted into a number of environment protection actssuch as the Environment Protection Act, 1986, TheWater ( Prevention and Control of Pollution ) Act 1974,
The Air (), 1981, The wildlife Protection Act, 1972 etc. Besides this the Central and state governments have set
up separate pollution control boards.
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Procedural Implementation
Consumer Protection Requirements : To protectthe consumers from any unethical practices and
unfair acts, all organizations have to abide to theprovisions of the Consumer Protection Act.
The issues of consumer protection is highlightedin the procedural implementation and at the
time of formulation business and operationallevel strategies.
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Structural Implementation
Org. growth : With a change in the objectives inan upward direction, suitable changes are to be
made in the formal and informal organization. Org. structure : In alignment with the changed
strategies, suitable changes have to be made inthe org. structure. Shifting from simple
structures to more complex structures like theMatrix or Hybrid structures may be essential.
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Structural Implementation
Phases of Organizational Growth : Initial expansion & accumulation of
resources Rationalization of the use of resources. Expansion into new products & business
lines Development of new organization structure
to enable effective mobilization & utilizationof resources.
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Options
The above 4 stages give rise to 3 types oforganization structures :
Type 01 : One organization, single product
market, hence central decision making. Type 02 : Expansion and hence top boss
delegated some decision making & authority tomanagers.
Type 03 : Diversification leads to multi productmulti structure and hence need for complete de centralization arises.
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Types of Org. Structures
Simple org. structure : Two levels, owner manager &employee. Useful for small firms. Implementation mosteasy. Success depends upon the skill levels of the
owner. Functional org. structure : As an org. grows & develops
a number of related products and markets, structurechanges to reflect specialization in functional areas i.eproduction, marketing, R&D, etc.
Divisional Org. structure : As firms develop new productsin different industries and markets, they may evolvedivisional org. structure. Each division may operateautonomously under a divisional head.
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Types of Org. Structures
SBU Structure : When divisional structuresbecome unmanageable by one CEO, orgs. mayreorganize themselves by appointing VPs foreach related business.
Matrix org. structure : Used to facilitate &development & execution of variousprogrammes or projects. Each of the VPs havefunctional responsibility for all the projects, whileeach project manager has project responsibilitycompleting and implementing strategy.
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Patterns of Growth of Large Corporations:
Simple structure is the oldest and most commonorganizational form
Staff serve as an extension of the top executivespersonality
Highly informal
Coordination of tasks by direct supervision
Decision making is highly centralized Little specialization of tasks, few rules and
regulations, informal evaluation and reward system
Simple Structure
P tt f G th f L C ti
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Patterns of Growth of Large Corporations:
Functional Structure
Lower-level managers, specialists, and operating personnel
Di i i l St t
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Divisional Structure
Lower-level managers, specialists,
and operating personnel
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Divisional Structure
Organized around products, projects, or markets
Each division includes its own functional
specialists typically organized into departments Divisions are relative autonomous and consist of
products and services that are different fromthose of other divisions
Division executives help determine product-market and financial objectives
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Divisional Structure
Strategic business unit (SBU) structure
Divisions with similar products, markets,
and/or technologies are grouped intohomogenous SBUs
Task of planning and control atcorporate office is more manageable
May become difficult to achievesynergies across SBUs
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Matrix Structure
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Keys for org. structure
Functional Structure It is used for a singleproduction or a related product, single locationorganization, medium in size. Eg. John deer,Tractor manufacturing.
Divisional Structure It is used for multi product,multi location organization, vast in the turnover,complex to control, may be multinationals. Eg.Tata Motors in Pune
Matrix Structure It is used where you want tomake the organization innovative or sometimeyou want cost optimization.
Strategic Business Unit SBU are used to makeorganization profit and result oriented.
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Behavioral Implementation
Leadership: Three Interdependent Activities
Leadership is the process of transforming
organizations from what they are to what theleader would have them become
Leadership should be
Proactive
Goal-oriented
Focused on the creation and implementation of acreative vision
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DeterminingStrategic
Direction
Exploiting &Maintaining
CoreCompetencies
DevelopingHumanCapital
Sustainingan Effective
OrganizationalCulture
EmphasizingEthical
Practices
EstablishingBalanced
OrganizationalControls
Exercise of Effective Leadership
Effective Strategic Leadership
D t i i
Effective Strategic Leadership
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Strategic direction means the development of a long-term vision of a firms strategic intent.
A charismatic leader can help achieve strategic intent.
It is important not to lose sight of the strengths of theorganization when making changes required by a newstrategic direction.
Executives must structure the firm effectively to help
achieve the vision.
Determining
Strategic
Direction
Determining
Strategic
Direction
Exploiting &Maintaining
CoreCompetencies
DevelopingHumanCapital
Sustainingan Effective
OrganizationalCulture
EmphasizingEthical
Practices
EstablishingBalanced
OrganizationalControls
Effective Strategic Leadership
E l i i &
Effective Strategic Leadership
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Exploiting &
Maintaining
Core Competencies
Determining
Strategic
Direction
Exploiting &Maintaining
CoreCompetencies
DevelopingHumanCapital
Sustainingan Effective
OrganizationalCulture
EmphasizingEthical
Practices
EstablishingBalanced
OrganizationalControls
g p
Core competencies are resources and capabilities that serve asa source of competitive advantage for a firm over its rivals.
Strategic leaders must verify that the firms competencies areemphasized in strategy implementation efforts.
In many large firms, and certainly in related diversified ones,core competencies are exploited effectively when they aredeveloped and applied across different organizational units.
Core competencies cannot be developed or exploitedeffectively without developing the capabilities of human capital.
D l i
Effective Strategic Leadership
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Developing
Human
Capital
Determining
Strategic
Direction
Exploiting &Maintaining
CoreCompetencies
DevelopingHumanCapital
Sustainingan Effective
OrganizationalCulture
EmphasizingEthical
Practices
EstablishingBalanced
OrganizationalControls
g p
Human capitalrefers to the knowledge and skills of the firmsentire workforce.
Employees are viewed as a capital resource that requiresinvestment.
No strategy can be effective unless the firm is able to develop andretain good people to carry it out.
The effective development and management of the firmshuman capital may be the primary determinant of a firmsability to formulate and implement strategies successfully.
Sustaining an
Effective Strategic Leadership
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Sustaining an
Effective
OrganizationalCulture
Determining
Strategic
Direction
Exploiting &Maintaining
CoreCompetencies
DevelopingHumanCapital
Sustainingan Effective
OrganizationalCulture
EmphasizingEthical
Practices
EstablishingBalanced
OrganizationalControls
g p
An organizational culture consists of a complex set of
ideologies, symbols, and core values that are sharedthroughout the firm and influences the way it conductsbusiness.
Shaping the firms culture is a central task of effectivestrategic leadership.
An appropriate organizational culture encourages thedevelopment of an entrepreneurial orientation amongemployees and an ability to change the culture asnecessary.
Reengineering can facilitate this process.
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Every job in the company is essential and important
The benefits ofbusiness reengineeringaremaximized when employees believe that:
All employees must create value through their work
Constant learning is a vital part of every persons job
Teamwork is essential to implementation success
Problems are solved only when teams accept theresponsibility for the solution
Changing Culture and Reengineering
Emphasizing
Effective Strategic Leadership
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Emphasizing
Ethical
Practices
Determining
Strategic
Direction
Exploiting &Maintaining
CoreCompetencies
DevelopingHumanCapital
Sustainingan Effective
OrganizationalCulture
EmphasizingEthical
Practices
EstablishingBalanced
OrganizationalControls
Ethical practices increase the effectiveness of strategyimplementation processes.
Ethical companies encourage and enable people at allorganizational levels to exercise ethical judgment.
To properly influence employee judgment and behavior,ethical practices must shape the firms decision-makingprocess and be an integral part of an organizations culture.
Leaders set the tone for creating an environment of mutual respect,honesty and ethical practices among employees.
Establishing
Effective Strategic Leadership
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EstablishingBalanced
OrganizationalControls
Determining
Strategic
Direction
Exploiting &Maintaining
CoreCompetencies
DevelopingHumanCapital
Sustainingan Effective
OrganizationalCulture
EmphasizingEthical
Practices
EstablishingBalanced
OrganizationalControls
Organizational controls provide the parameters within which
strategies are to be implemented and corrective actionstaken.
Financial controls are often emphasized in largecorporations and focus on short-term financial outcomes.
Strategic control focuses on the contentof strategic actions,rather than theiroutcomes.
Successful strategic leaders balance strategic control andfinancial control (they do not eliminate financial control) withthe intent of achieving more positive long-term returns.
d f
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A Leaders Bases of Power
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Functional Implementation
Five functional areas that need specialaddress in implementation are :
Marketing
Research and development
Production-operations-manufacturing
Human resource managementFinancial-accounting
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Marketing
Marketing is defined as a process ofassessing and meeting individuals or
groups wants and needs by creating,offering, and exchanging products ofvalue.
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Possible Marketing Strategies
Segmentation StrategiesGeographic
DemographicPsychographicBehavioral
Target Market Selection Strategies
Single-segment concentration
Selective specializationProduct specializationMarket specializationFull market coverage
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Differentiation Strategies
Product itself
ServicesPersonnel Image
Positioning Strategies
Attribute positioning
Benefit positioning
Use-application positioningUser positioning
Competitor positioningProduct category positioningQuality-price positioning
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Marketing Mix Strategies
New-product developmentProduct lineBrandPackaging-labelingProduct life cycle decisions
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Product Life Cycle
Introduction Growth Maturity Decline
Sales
Time
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PLC
The product life cycle (PLC) concept is arecognition that a products sales rise and
decline, bringing about the need for differentstrategies for coping with these ups and downs.
The various stages of the PLC might require
changes not only in the product strategies, butin the other Ps, as well.
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Marketing Mix Strategies
Pricing The pricing strategy depends upon the
organizations pricing objectives survival, maximum currentprofit, maximum current revenue, maximum sales growth,
maximum market skimming, product-quality leadership, orother.
Markup pricing Target-return pricing Perceived-value pricing Value pricing Going-rate pricing Sealed-bid pricing Geographical pricing Promotional pricing
Price discounts-allowances Discriminatory pricing
Product mix pricing
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Promoting
Advertising Billboards Point-of purchase displays Symbols and logos Packaging inserts Sales promotion
Public relations Personal selling Direct marketing
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Possible HRM Strategies
Organize for efficiency or innovation
Organize for control or flexibility
Use specialized or broad job categories Use detailed or loose work planning
Use internal or external recruitment
Who makes hiring decision Whats important in hiring
Formal or informal approach
Possible Human Resource Management
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gStrategies
Employee Separations
How to downsize Hiring freeze Support for terminated employees Preferential or non-preferential rehiring process
Performance Appraisal Customized or uniform appraisals
Appraisal for developmental or control purposes Multipurpose or focused appraisals Use multiple or one input
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Possible Human Resource ManagementStrategies
Training and Development Buy or develop skills Individual or team-based training On-the-job or external training
Job-specific or generic training
Compensation
Fixed-pay or variable pay system Job-based or individual pay Seniority-based or performance-based system Centralize or decentralize pay decisions
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Possible Research andDevelopment Strategies
R&D Emphasis
Basic scientific research
Product development Process development
R&D Timing
First mover
Follower
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First Mover Advantages-Disadvantages
An organization thats first to bring a newproduct innovation to the marketplace or
to use a new process innovation is called afirst mover. Being a first mover has certainstrategic advantages and disadvantages.
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Advantages
Reputation for being innovative andindustry leader
Cost and learning benefits resulting frommoving along experience curve first
Control over scarce assets preventingcompetitors from having access to them
Opportunity to begin building customerrelationships and customer loyalty
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Disadvantages
Uncertain over exact direction technologyand market will go
Risk of competitors imitating innovations(free-rider effect)
Financial and strategic risks
High development costs
Possible Research and
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Possible Research andDevelopment Strategies
Product and ProcessDevelopmentWho conducts R & D
Separate R&D department
Cross-functional team
Some variation
How is R& D conducted
Use prototypes
Use product tests
Use design reviews
Use test markets
How to implement new design
How to evaluate success of new design
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Possible Financing-AccountingStrategies
Evaluating Financial Performance
How often
How much analysisFinancial Forecasting, Planning, and Budgeting
Percent of sales forecast
Discretionary financial needed model
Sustainable rate of growth model; Types of budgets used
Financing Mix
Financial structure-capital structure
Short-term versus long-term fund sources
Permanent or long-term sources
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Possible Financial-Accounting Strategies
Other Financial Management Decisions
Capital budgeting choicesStock dividend policyCapital budgetingCash flow managementWorking capital management and short-term financingCash and marketable securities managementAccounts receivable and inventory managementUse term loans or leases
Current Financial-Accounting Strategies
Controlling costs
Compliance; New financial performance measures
Valuing intangible assets